Op-Ed: Alberta's Revenue Difficulties: Redford Talks to Albertans

Edmonton
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Alberta Premier Alison Redford addressed the people of Alberta on Thursday evening. In her address, in what she depicted as starting a conversation with Albertans, Redford warned of very difficult choices her government will face.

While warning Albertans of the very difficult choices facing her government, Redford assured Albertans of her commitment to supporting communities and families.

When Albertans elected our government last April, you placed your trust in us to manage in both good and in challenging times, to protect Alberta's gains, while building for the future.

When the Alberta Progressive Conservative government passed its 2012 budget, prior to the provincial election, it estimated $40.3 billion for budget revenue. Almost 30% of that revenue was based on non-renewable resource revenue.

The estimate of $99.25 as an average price per barrel of oil was used as a baseline. Based on the governments own assumptions, a variation in the price by just one dollar, would result in a $223 million over the 12 months period.

Premier Redford said that due to growing levels of oil production in the United States and the fact we have virtually nowhere else to sell our oil but to the U.S. market, Alberta is getting just over $50 dollars a barrel for our oil. She said that this will result in the loss of $6 Billion in revenue, an amount equal to Alberta's spending on education.

Alberta is looking for new markets for bitumen oil

The Premier said that she is looking for new markets for Alberta oil and is also pushing a national energy strategy.

It's why I will continue to fight for a Canadian Energy Strategy that gets our oil both to the West and East coast in Canada, to the refineries in the U.S. Gulf Coast and to markets overseas — particularly growing economies in Asia.

We have a duty to ensure that our resources — especially Alberta oil and gas — get to new markets at a much fairer price.

Without getting into any detail, Alison Redford said that the province would live within its means.

Alberta's Bitumen Pipeline Dilemma

While Alison Redford is looking for expanded markets for Alberta's bitumen oil, it also needs a means to transport it. This requires approval of pipelines. Currently two pipelines are in the approval stage, the XL Keystone pipeline, which would take oil from Hardesty, Alberta to Port Arthur, Texas and the Northern Gateway pipeline from Fort Saskatchewan, Alberta to Kitimat, BC.

The XL Keystone pipeline was rejected by President Obama, due environmental concerns with the route crossing the sensitive Nebraska Sand Hills. Nebraska has approved a new route earlier this week, but will President Obama grant the presidential certificate? Obama's environmental base is opposed to any further development of the Alberta Oilsands and gave notice during his inauguration speech that the environment is his priority.

We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations. Some may still deny the overwhelming judgment of science, but none can avoid the devastating impact of raging fires, and crippling drought, and more powerful storms. The path towards sustainable energy sources will be long and sometimes difficult. But America cannot resist this transition; we must lead it. We cannot cede to other nations the technology that will power new jobs and new industries – we must claim its promise. That is how we will maintain our economic vitality and our national treasure – our forests and waterways; our croplands and snowcapped peaks.

The Northern Gateway Pipeline, which would be utilized to bring Alberta oil to Asian markets, is opposed by British Columbians, natives and environmentalists. There is legitimate concern that the pristine coast could suffer a major tanker mishap and that the routing of a pipeline across the province could result in spills, which would be difficult to get to. British Columbia Premier, Christy Clark, has vowed to stop the pipeline and has demanded sharing of resource revenue with Alberta. Unfortunately both Clark and Redford have stopped talking to each other. Clark is facing an election and the pressure to resist the pipeline will be immense.

Alberta's 2013 budget will be released in approximately six weeks. Last year's budget was a gross overestimate of oil revenue, either by design or due to incompetence. Opposition party leaders responded to her address. Raj Sherman criticized the government for tying the education of children and the care of the sick to a barrel of oil.

Brian Mason, the leader of the New Democratic Party (NDP) also criticized the dependence on oil revenue and clearly pointed he finger at the government for miscalculation of oil revenue. He depicted the speech as a tool for blaming others.

“It doesn’t do any good to talk about how we might have pipelines four, five, or six years from now,” Smith said in Calgary. “What is the plan over the next three, four or five years to get us accustomed to this new reality of lower energy prices and lower revenues?”

“I don’t think we’ve seen any answers out of this premier, and hopefully we’ll be able to see something on March 7.”

The March 7th budget will indeed reveal the details of Redford's plan for 2013. Living within our means, without raising taxes or introduction of a provincial sales tax, mean that there will be substantial cuts in order to cut a current $3 billion deficit.

Unfortunately Redford's address contained a lot of explanation and reasons for decreased revenue, but very little detail on the way forward.